Tesla stock races 3% after Friday’s 5% fall: what’s driving the rebound?
Tesla shares rose early Monday, recovering from a sharp sell-off at the end of last week.
The stock was up 3.5% at ₹428, while the S&P 500 gained 1.3% and the Dow Jones Industrial Average rose 1.1%.
The rebound followed Friday’s 5.1% drop in Tesla shares, when renewed trade tensions between the US and China rattled global markets.
The S&P 500 had also fallen 2.7% that day.
Beijing’s threat to restrict exports of rare earth materials drew a swift response from US President Donald Trump, who warned of additional tariffs on Chinese imports.
Trump’s comments soothe market jitters
President Trump attempted to calm investor nerves on Sunday, writing on Truth Social:
“Don’t worry about China, it will be fine,” and adding that President Xi “doesn’t want Depression for his country, and neither do I.”
While Tesla does not rely heavily on imports from China, the company’s exposure to the Chinese market remains significant.
Its Shanghai Gigafactory serves as a key production hub, and the country accounted for nearly 40% of Tesla’s global sales in the first half of 2025.
During that period, the automaker sold about 263,000 vehicles to Chinese buyers.
A volatile year for Tesla investors
The year has been turbulent for Tesla shareholders, marked by sharp swings in the company’s market valuation.
Despite concerns about its lofty valuation and growing competition in the electric vehicle space, Tesla’s stock has managed to recover from its earlier lows this year.
The Tesla stock has climbed up around 70% in the past six months.
Analysts continue to debate the company’s trajectory amid questions about regulatory risks, demand stability, and pricing strategies.
However, investor sentiment surrounding the AI opportunities that the stock presents.
Brokerage firm Melius Research initiated coverage of Tesla, calling it a “must own,” as per a CNBC report.
The firm said, “Tesla is unique in its ability to deliver on this potential. Access to compute and ability to manage it have become a new differentiator in a world where rising computing power accelerates the pace of change.”
The brokerage firm has a $520 price target on the Tesla stock.
Shanghai factory ramps up production
Tesla’s Shanghai Gigafactory — its largest manufacturing facility worldwide — has begun ramping up production in the fourth quarter, according to Tesla vice president Tao Lin.
In a Weibo post on Monday, she said the plant had entered a new phase of output expansion.
The company’s China-made vehicle sales rose 2.8% in September compared with the same month last year, ending a two-month decline.
The increase coincided with the start of deliveries of Tesla’s new six-seater model in China, which has drawn early interest from local buyers.
At the start of the week, the combination of easing trade concerns, stronger China sales, and renewed analyst optimism appeared to help restore some confidence in the electric vehicle maker’s stock.
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